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Do couples bunch more? Evidence from partnered and single taxpayers

Author

Listed:
  • Nazila Alinaghi

    (Victoria University of Wellington)

  • John Creedy

    (Victoria University of Wellington)

  • Norman Gemmell

    (Victoria University of Wellington)

Abstract

Recent papers hypothesise that estimates of the elasticity of taxable income (ETI) for individuals may be underestimated where those individuals are taxed separately but are part of a couple. This paper investigates that issue by applying the ‘bunching at tax kinks’ approach to estimate separate ETIs for partnered and single individuals. It shows that there are opportunities for, and constraints on, bunching specific to partnered individuals. Using administrative taxable income data for the New Zealand taxpayer population over the period, 2000 to 2017, taxpayers are matched to their partners using population census data. Results strongly support the hypotheses that ETIs are larger for partnered, than for single, individuals, and where both partners are located in the same income tax bracket. Couples where one (and especially where two) partners are self-employed reveal particularly large elasticities.

Suggested Citation

  • Nazila Alinaghi & John Creedy & Norman Gemmell, 2023. "Do couples bunch more? Evidence from partnered and single taxpayers," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 30(4), pages 1137-1184, August.
    • Handle: RePEc:kap:itaxpf:v:30:y:2023:i:4:d:10.1007_s10797-022-09759-5
    DOI: 10.1007/s10797-022-09759-5
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    References listed on IDEAS

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    More about this item

    Keywords

    Elasticity of taxable income; Bunching estimates; Couples;
    All these keywords.

    JEL classification:

    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household

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